Prototypes offer insight into Medicare costs

March 1, 2003

A Kaiser Family Foundation report examining the cost implications of giving Medicare recipients coverage options has found that there are "no obvious 'right' choices for beneficiaries." The report, Paying for Choice: The Cost Implications of Health Plan Options for People on Medicare, estimates a range of spending for three different prototype beneficiaries in eight markets.

"Spending is often lower in Medicare+Choice plans, but this is not always the case," the authors found. The question of whether an M+C plan will be available to beneficiaries is a complicating factor. And M+C — as is the case with all options — is subject to geographic variation. For instance, a frail, 80-year-old woman who chooses the least expensive medigap plan would spend $6,376 in Manchester, N.H., but $9,520 if she lived in Miami. On the other hand, she could spend as little as $1,342 for the cheapest M+C plan in Miami, but as much as $7,082 for the lowest-cost M+C option in Seattle. The other markets examined in the study are Oakland, Calif., Minneapolis, Chicago, Dodge City, Kan., and Baltimore.

M+C often least expensive choice

Estimates for a 50-year-old man with disabilities

Medigap

M+C

No supplemental insurance

Range of costs across all sources

Premium range

$432–14,412

$0–1,194

$0

$0–14,412

Nonpremium range

$7,445–11,058

$6,010–11,049

$12,335–12,380

$7,445–12,380

Total range of costs

$8,541–21,857

$6,010–11,049

$12,335–12,380

$6,010–21,857

Estimates for a healthy 65-year-old woman

Medigap

M+C

No supplemental insurance

Range of costs across all sources

Premium range

$407–8,074

$0–1,194

$0

$0–8,074

Nonpremium range

$1,587–2,808

$1,342–8,134

$10,546–10,673

$1,342–10,673

Total range of costs

$2,683–9,661

$1,342–8,962

$10,546–10,673

$1,342–12,482

Estimates for a frail 80-year-old woman

Medigap

M+C

No supplemental insurance

Range of costs across all sources

Premium range

$528–8,074

$0–1,194

$0

$0–8,074

Nonpremium range

$4,408–8,532

$1,342–8,134

$10,546–10,673

$1,342–10,673

Total range of costs

$6,376–12,482

$1,342–8,962

$10,546–10,673

$1,342–12,482

SOURCE: PAYING FOR CHOICE: THE COST IMPLICATIONS OF HEALTH PLAN OPTIONS FOR PEOPLE ON MEDICARE, KAISER FAMILY FOUNDATION, MENLO PARK, CALIF.